THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN ROBERTS, CNN SR. NATIONAL CORRESPONDENT: A new debate about U.S. troop levels in Iraq. Plus, a war of words on Capitol Hill and the tough political decisions faced by the new Democratic majority. THIS WEEK AT WAR begins in one minute. But first, a check of the headlines from the CNN Center. (NEWS BREAK)

ROBERTS: U.S. troops caught between a raging Iraqi insurgency and a war of words in Washington. Politicians and military brass debate timetables, troop levels and the strategy to win the war. Will Iran force the United States into face-to-face talks with nuclear ambitions and Iraq? And another stern warning to a nuclear North Korea. Will it resonate, as President Bush tours the region? I'm John Roberts with THIS WEEK AT WAR.

Let's look at what our correspondents reported day by day this week. Monday, President Bush meets at the White House with the Iraq study group whose report may be the blueprint to one day get U.S. troops out of Iraq.

Tuesday, new evidence of lawlessness in Baghdad as gunmen wearing police commando uniforms kidnap dozens of men from a research institute.

Wednesday John Abizaid in charge of all U.S. forces in the Middle East says he's optimistic about stabilizing Iraq and boosting the number of Iraqi forces.

Thursday the U.S. central command confirms 2200 more Marines are bound for the giant Anbar province, the center of gravity of the Sunni insurgency.

Friday in Hanoi, President Bush says the Vietnam War offers lessons on Iraq, insisting we will succeed unless we quit.

Among our elite THIS WEEK AT WAR troops, Arwa Damon on a bold kidnapping in Baghdad. Jamie McIntyre on rising troop levels in Iraq and Aneesh Raman on the Iranian nuclear threat. All ahead on THIS WEEK AT WAR.

In the backwash of the U.S. election, the U.S. Congress dove right into a new debate over Iraq policy. Is this just a holding pattern as the White House and the Pentagon await new studies on what went wrong and what lies ahead? Joining me now correspondent Arwa Damon. She's in Baghdad for us and in our Washington bureau, senior Pentagon correspondent Jamie McIntyre and CNN military analyst Brigadier James "Spider" Marks U.S. Army retired. On Wednesday, Senator John McCain argued to increase the number of U.S. troops in Iraq during a hearing with the head of the central command general John Abizaid.

(BEGIN VIDEO CLIP)

SEN. JOHN McCAIN (R) ARIZONA: Would it make sense to say it might be well to get both Baghdad and al Anbar province under control before we have another battle of Fallujah and lose many more lives?

(END VIDEO CLIP)

ROBERTS: So John McCain has long been advocating an increase in the number of troops on the ground in Iraq. We heard this week that there is another 2200 Marines going to go into Anbar province. But beyond that Jamie, on regular troop rotations; Abizaid doesn't seem to have any kind of an appetite for significantly increasing the number of troops there.

BRIG. GEN. JAMES "SPIDER" MARKS, CNN MILITARY ANALYST: You saw here the dynamic of General Abizaid essentially digging in his heels and not really being swayed by any of the armchair commanders in Congress who seem to think they have a better idea. And I guess the answer is if you don't have confidence in General Abizaid's judgment, somebody ought to replace him. But other than that, he made a very impassioned argument that more U.S. troops will not change the dynamic except to provide perhaps some very, very temporary relief.

ROBERTS: Spider, is this a little tinkering around the edges here in anticipation of the Baker report? Do you expect that anything significant will happen until that report comes out?

MARKS: I would think something significant could happen, absolutely. In fact General Abizaid indicated that what he's looking for is to increase the amount and the capacity of the U.S. forces to train Iraqi forces. He mentioned that. He said needs to be a primary focus. Now tinkering around the edges might mean an up tick a little bit to adjust who does that and how they do it, but not an aggregate increase in the numbers.

ROBERTS: Of course, one of the big parts of the strategy here is training up the Iraqi forces to the point where they can take over security. Then maybe one day U.S. troops will be able to come home. Here's what General Anthony Zinni said about that to the "New York Times" on Wednesday. He said, quote, there's a premise that the Iraqis are not doing enough now, that there is a capability that they've not employed or used. I'm not so sure they are capable of stopping sectarian violence. Arwa Damon, is that the sense of it there in Baghdad, that the Iraqi forces do not have the capability to be able to control the sectarian violence, not that they're holding back, but that they don't have the goods?

ARWA DAMON, CNN CORRESPONDENT: Well, John, right now, no, they don't. And that's why this U.S. presence is so essential. Many here view the U.S. presence as being the only force really that is stopping the sectarian violence from getting even worse than it is right now, if that is even imaginable, that a worse scenario could emerge. Especially when you talk to Iraqis in Baghdad and Baghdad is considered to be the main battlefield for all of Iraq. They don't have is a lot of faith in their security forces. They see up to 70,000 U.S.and Iraqi troops here in the capital. Yet we have incidences like that mass kidnapping that took place at the ministry of higher education where armed gunmen were able to masquerade as Iraqi police and pull off this incredibly mass kidnapping.

ROBERTS: On that point, let's take a look at the way Michael Ware reported that. That was on Tuesday.

(BEGIN VIDEO CLIP)

MICHAEL WARE, CNN CORRESPONDENT: This sophisticated raid executed at 10:00 a.m. just after rush hour was audacious, so many gunmen, so many hostages possibly the largest mass kidnapping of the war. All within the heart of the capital with more than 60,000 American and Iraqi troops on the streets.

(END VIDEO CLIP)

ROBERTS: So "Spider" Marks, there is this idea that perhaps gunmen masquerading as police commandos were responsible for this raid. There are other schools of thoughts that maybe the police commandos themselves were responsible for it. Certainly there had been other instances where the official government security forces have been involved in kidnappings, death squads, illegal checkpoints. If Iraqis can't trust Iraqi security forces to secure the country, how can they be expected to be up to the job?

MARKS: It's going to take time. That's the issue. You can't walk away from it. The Iraqis can't walk away from it. And to, to modify in some way how they go about training and how they try to inject some form of professional ethos into this force. The only way to do that is over time. So you've got to stick with the training of the forces and you can't. Understand, you can't paint all the Iraqi security forces with the same brush. In many cases the military forces are doing quite well. And they've been tested in battle. In some cases, as we've seen, the police are not being trained as well. And they've got some real challenges. How do you address that is the long-term challenge, but it's got to be done. So you can't throw them all into the same bucket and say the Iraqi security forces aren't up to the task. You've got to be a little more granular in terms of how you assess that and then make the fix.

ROBERTS: Jamie, "Spider" and I had mentioned this a couple minutes ago. What's your sense of what's going on at the Pentagon? Are they waiting for this Baker Hamilton report to come out and anything to do between now and then is just a little fixing around the edges?

JAMIE McINTYRE, CNN CORRESPONDENT: No, I get the sense they're not waiting for it. In fact, I get the sense that their expectations for this report are pretty low. Any report that has to rely on the consensus of a large group of people to figure out a new military strategy. You saw General Abizaid lay out the strategy which I called this week the current strategy on steroids, really trying to inject something into this training program. When you put your finger on the real problem, it is not the number of troops. It's not really even the equipment that they have. It's their desire and their loyalties. And we're seeing even divisions within the Shia fighting within themselves. When you have that kind of a situation in the security forces, that's a real problem. That's why General Abizaid believes that doubling, perhaps even going further in the number of people, advisers and trainers embedded in the forces is the solution. If anything going to work, he thinks that's going to work and I'm not even sure he thinks that's going to work.

ROBERTS: I certainly think though that this Baker-Hamilton report is going to get a lot of political attention, if not attention from the military folks at the Pentagon. Arwa Damon, what about the Iraqi government? Nouri al Maliki said that he's going to shuffle his cabinet very soon. Is that expected to create a more unified government or could that in fact just serve to consolidate Shiite power at the very highest levels?

DAMON: John, that's pretty much what everyone is waiting to see if this cabinet shuffle does in fact happen. That's exactly what it's going to test, is Nouri al Maliki's, first of all, his ability to hold this government, this entire country together. And second of all, if he is able to choose and select his own ministers, the choices that he makes are going to end up being testimony to where his own loyalties lie.

But we look at what's happening here. We're seeing this Shia-led government that is issuing an arrest warrant for Harith al-Dhari, who is arguably the country's most influential Sunni figure and creating him, turning him into essentially a rallying point for any Sunnis that want to topple the Shia government, that want to act up against the Shia government and we're seeing Nouri al Maliki's government at such an incredibly sensitive time when relations between both sides are at best tense making a move like issuing a warrant for the most prominent Sunni cleric. And it causes many people here to pause and say, well, what is he doing? It does look like he is, by all accounts trying to consolidate Shia power.

ROBERTS: And off the record, there are some U.S. officials who told me in the month that I was there, that they think that one of the biggest problems is this increasing consolidation of Shia power. Jamie McIntyre, "Spider" Marks, thanks for being with us. Arwa, stay with us because we want to come back to you in just a couple of minutes.

First, though, remembering a husband, a soon to be father and a soldier. Army Specialist Justin Garcia was killed in Baghdad on Tuesday when an improvised explosive device struck his Humvee. A native of Queens, New York, Garcia was serving his first tour of duty with the first battalion, 23, 33rd infantry regiment. He joined the Army after graduating from St. Thomas Aquinas College with a bachelor's degree in criminal justice. Garcia's family says he was eager to serve his country, especially after 9/11.

(BEGIN VIDEO CLIP) DONNA NARCISCO, GARCIA'S MOTHER-IN-LAW: Just a wonderful, gifted young man. And we just fell so much in love with him.

CYNTHIA DEPALMA, GARCIA'S AUNT: We're really proud of what he's done for the country. We just wish he was here.

(END VIDEO CLIP)

ROBERTS: Garcia's early life wasn't easy. He lost both of his parents as a teenager. So he was especially happy when he learned this past father's day that he was about to become a dad. Specialist Justin Garcia was 26 years old.

Straight ahead, a new Democratic majority in Congress is ready for action on Capitol Hill. But do Democrats have any real ideas and are those ideas any better than the last crew's? Our war of words segment is next on THIS WEEK AT WAR.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D) NEW YORK: Our challenge has really just begun. The American public has rejected the policies of George Bush and they're waiting to see what we can do.

(END VIDEO CLIP)

ROBERTS: Senator Chuck Schumer, senior Democrat of New York, spelling out the opportunity and the pitfalls for his party. Will they be able to satisfy the voters' hunger for change on Iraq?

Helping us sort through this week's war of words, chief national correspondent John King and keeping watch on Capitol Hill for us, Congressional correspondent Dana Bash. So John King, what are the Democrats going to do? What plan do they have in their pocket? They didn't have anything going into the election. Now it seems they're saying, well, let's wait for the Baker-Hamilton report.

JOHN KING, CNN CORRESPONDENT: Well, they are waiting. They are waiting. In the short term though John, they do want to keep the pressure up and convince the president that they have a mandate from this election. So you see Senator Levin on the Senate side saying I'm going to draft a resolution that says start to bring the troops home in four to six months. But everyone understands that is to put political pressure on the White House. We're in a holding pattern waiting for what the Baker commission recommends. But it's quite interesting. Ask around town, a number of people are getting nervous about this other review. Inside the Pentagon, Pete Pace, the chairman of the joint chiefs, has his own internal review. Many are beginning to wonder, did the president ask for that in case he doesn't like what Secretary Baker recommends so he has a different set of competing proposals to muddy the waters a little bit. So we're in a feeling out period (INAUDIBLE) .

ROBERTS: Different menus for what you want to eat. Dana Bash, are the Democrats getting away with doing nothing on this other than a lot of talk?

DANA BASH, CNN CORRESPONDENT: Well, certainly there is a lot of talk. What Senator Levin said in a press conference this past week is that he is going to press, as John was saying for this idea of starting to bring troops home in four to six months. But he admitted beyond that, there really isn't a lot that they can do because they're waiting for a lot of reports and reviews that are in the works. So they are going to pause a little bit when it comes to the policy. But one interesting thing this week John is that both Senator Levin and Senator Warner came out and said that they are working together on some kind of proposal that they'll put out in January that could be some kind of prescription, maybe even legislation for a new course in Iraq. That should be interesting to see.

ROBERTS: That will be interesting to watch. Also interesting to watch this week in the war of words was the fireworks on Capitol Hill on Wednesday as CENTCOM commander General John Abizaid testified before Congress. Here's some of the fireworks that were aimed his way.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Stay the course is not a strategy for success in Iraq.

ROBERTS: Dana Bash, how were you struck by that hearing? What were your impressions of what was going on both among the Democrats and the Republicans?

BASH: What was interesting is that Democrats -- there was a big deal of course made about this is the first Iraq hearing since Democrats won control of Congress. But they almost didn't have to show up because Republicans were so tough and really frustrated, openly frustrated in a way that we really haven't seen probably because of the election results when it comes to the Iraq war. You even had not only Senator John McCain, who has been openly frustrated before, but even some of the president's closest staunchest allies like Senator Saxby Chambliss of Georgia. He was openly exasperated when he was doing the questioning of the panel. That's what was interesting, is that we're expecting the Democrats to push things along here because they have control of Congress and they say a mandate because of Iraq. But Republicans are now perhaps among the most eager to get a change in Iraq.

ROBERTS: John King, is this a foretelling of what we may see during the Robert Gates confirmation hearings next month, that they'll turn that rather than into a debate about his qualifications into a debate about the Iraq war? KING: Very much the hearings will be a platform to discuss Iraq war strategy and it's quite interesting. As you know, the president in Vietnam this past week. He says we'll succeed unless we quit. They said that during Vietnam and we did quit Vietnam. This president is trying to convince not only the American people to make his political case here, but he stood next to John Howard, the prime minister of Australia, a very modest contingent from Australia, but Prime Minister Howard he's taken a ton of grief back home for that. And here he is, looking at the U.S. presence saying, are you going to pull out of Iraq and leave me in the lurch? So it's not just a political debate here in the United States.

ROBERTS: I kind of scratched my head over what President Bush said that the lessons of the Vietnam war are we will succeed unless we quit. The lessons of the Vietnam War to many people are don't get yourself mired into a war that you can't win and if you find yourself in that, get out as quickly as possible.

KING: He makes the same argument as Vietnam when they said, if we left there would be a domino effect, the communists would spread across Asia. That is the president's argument if we leave Iraq. The terrorists will spread across the Middle East. So there are some parallels like it or not.

ROBERTS: That may be more likely to happen than what the prediction was for Vietnam. Inside the Beltway there seems to be this climate of negativism at least according to General John Abizaid. Listen so what he said about that on Wednesday.

(BEGIN VIDEO CLIP)

GEN. JOHN ABIZAID, U.S. CENTRAL COMMAND: I would also say that despair is not a method. When I come to Washington, I feel despair. When I'm in Iraq with my commanders, when I talk to our soldiers, when I talk to the Iraqi leadership, they are not despairing.

(END VIDEO CLIP)

ROBERTS: Dana Bash, is it just an inside the Beltway phenomenon? I just came back from a month in Iraq. It is sometimes difficult to see where the source of optimism for many of these people lies.

BASH: I think the answer to that has to be no because just look at what happened less than two weeks ago with the election. I mean every indication is that it is not inside the Beltway. It came from outside the Beltway, from around the country and voters and Americans made their voices and their opinions occur with their votes. So I don't think it is the case. Having said that, it is clearly going to be the political topic going forward into what we're already talking about in 2008. You saw John McCain, Hillary Clinton, Evan Bayh on that panel with John Abizaid sort of laying their markers down for where they're going to stand when it comes to the big political debate on Iraq.

ROBERTS: They won the election saying time for a change, let's see if they can come up with that change. Dana Bash on Capitol Hill, John King, thanks very much.

From the political war of words in Washington to the apprehension here and across the Middle East over the long-term consequences of the war. I'm back with our Arwa Damon in Baghdad in just a moment. But first, some of the fallen in THIS WEEK AT WAR

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: I believe that it's important for us to succeed in Iraq not only for our security but for the security of the Middle East.

(END VIDEO CLIP)

ROBERTS: President Bush Monday on what he sees at stake in the war in Iraq. What is the spillover of events in Iraq into that whole region? And what role are Iraq's neighbors Syria and Iran playing in firing up insurgent violence? Correspondent Arwa Damon in Baghdad is back with us and joining us herein the studio Robert Malley. He's the Middle East and North Africa program director at the International Crisis Group. Arwa Damon, President Bush said repeatedly that he wanted the war in Iraq, the deposing of Saddam Hussein to reshape the Middle East. It appears as though that's happening but perhaps not in the way President Bush had hoped.

DAMON: No John, it's not happening in the way President Bush had hoped. It is, in fact, happening in a way that has many moderate Arabs on edge, to see the least. Even before the war happened, we were hearing a lot of chatter on the Arab streets and were predicting that the outcome of the war would actually be what we're seeing right now, that what they called America's little project in Iraq was not going to work out in the way that America hoped. It was meant to be this shining example of a blossoming democracy that was going to spill over and spread democracy across the Middle East. And what we're seeing right now is actually a rise of extremism, a rise of fundamentalist thought. And essentially what you could call the death of moderation.

ROBERTS: And of course, as the situation in Iraq continues to deteriorate and dovetailing in with the results of the American election, a lots of people are coming out with ideas on how to fix this. Here's what British Prime Minister Tony Blair said on Monday talking about an engagement across the Middle East.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: Offer Iran a clear strategic choice. They help the Middle East peace process, not hinder it. They stop supporting terrorism in Lebanon or Iraq. They abide by, not flout, their international obligations. In that case, a new partnership is possible.

(END VIDEO CLIP)

ROBERTS: So Robert Malley, Tony Blair is not the only one advocating diplomacy with potentially unsavory characters from the United States as Iran. James Baker is recommending that. The Iraq study group expected to come out with its recommendations. Is there something positive in engaging with Iran? Or is there a chance that the U.S. could just get jerked around?

ROBERT MALLEY, INTERNATIONAL CRISIS GROUP: I would say it is necessary. I'm not sure it's feasible. I'm not sure that even if it happens, it's going to be sufficient. The real question is how can you engage countries that have different interests from the ones we have? That means we're going to have to redefine what it is for Iraq and what it is for the region. Whether you can get the Iranians to some kind of common ground on what needs to happen in Iraq. But as a counterpart, you're going to have to give them some things about what they want for the region and the same goes for Syria. Engagements on all four, but we can't think that just by talking to them we're going to get what we want. They're going to want some things, too and we're going to have to see if there is overlap between what we're prepared to live with and what they're prepared to live with.

ROBERTS: When it comes to Iran in particular though, the lack of relations between United States and Iran have been at such a hostile level that could there be any constructive way forward or is it just going to be a dialogue about grievances?

MALLEY: It may be. Remember, the United States is not going to get either Iran or Syria or any country in the region to join it in what the region considers to be a failed enterprise, what was done in Iraq and even less so an enterprise that they think is hostile to their interests and that's the case of Iran or Syria. So all sides are going to have to revisit their assumptions and recalibrate their expectations if this is going to succeed. But as you say, right now Iran is not only sitting pretty happily looking at the mess in Iraq. They have oil revenues that have perhaps skyrocketed in the last few years. They feel that ideologically they are dominating the region. It's not really the moment that they prepare to give in to U.S. demands. So as I say, this is going to be a difficult discussion. We shouldn't put too much hope in it. But at the same time, if it doesn't happen, I think there's no chance of resolving the chaos in Iraq.

ROBERTS: A big question a lot of people have is how much influence does Iran wield in Iraq. Here's what General Michael Hayden, the CIA director said about that Wednesday.

(BEGIN VIDEO CLIP)

GEN. MICHAEL HAYDEN, CIA DIRECTOR: The Iranian head appears to be powerful and I would offer the view it appears to be growing. Iranian ambitions in Iraq seem to be expanding.

(END VIDEO CLIP)

ROBERTS: Arwa Damon, who do you think has got more influence with the Iraqi government, the United States or Iran?

DAMON: Well, John, there is certainly a very close if not uncomfortably close relationship between the current Iraqi government and Iran. The Prime Minister Nouri al Maliki spent a significant amount of time in Iran before he came back to Iraq. The foreign minister has a very close relationship with the Iranian ambassador. The question is and Iran is one of Iraq's neighbors, but the question is, at what point is this relationship one of mutual cooperation, one of trying to secure the Iran/Iraq border? And at which point does that get blurred into Iranian influence in Iraq in a way that is not going to benefit the stability of this country? But at the same time, the Iraqi government realizes that it still needs to keep a friend of America. It still needs to keep America at least for now as one of its main allies or else it is not going to be able to defeat the insurgency and the growing militias and violence that are happening here. So the government is in a very sticky position by all accounts, maybe even playing both sides.

ROBERTS: Robert Malley, briefly if you could, put this into the larger perspective as well. Can Iraq be solved without addressing the broader Middle East region and the concerns including the issues of Israel and the Palestinians?

MALLEY: I think what one of the outcomes of this Iraq war is that all the interconnections between Palestine, Syria, Israel, Lebanon, Iraq -- all of those have just become more intense. It will be much harder to resolve anything in isolation. It may be easier, today, to put everything in the mix, however difficult that seems, and try to fix that as a whole rather than to pick individual pieces.

ROBERTS: Robert Malley, thanks very much.

And to you Arwa Damon, in Iraq, good to see you again.

From Iraq to Iran, new questions about Iran's progress and its intentions with its nuclear program. Our Aneesh Raman is back in Tehran, THIS WEEK AT WAR.

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(NEWS BREAK)

ROBERTS: THIS WEEK AT WAR moves from Baghdad to Tehran; and fresh questions about Iran's boasting about progress in its nuclear development, in the face of continued U.S. and international president.

President Mahmoud Ahmadinejad said this week that his country, quote, "possesses the full nuclear fuel cycle." And Iranian officials brushed aside a report that international inspectors had found traces of plutonium at a nuclear waste facility in Iran.

Joining me now, via broadband, is International Correspondent Aneesh Raman, he's in Tehran. And with me here in the studio is Ray Takeyh, senior fellow for Middle Eastern Studies at the Council on Foreign Relations. He's also the author of the book "Hidden Iran: Paradox and Power in the Islamic Republic".

Ray Takeyh, Iranians just keep turning up the heat on this nuclear program. Initially it looked like it was a bargaining chip, now appearances that it is well beyond that?

RAY TAKEYH, COUNCIL ON FOREIGN RELATIONS: Oh, no, I think across the political spectrum in Iran they intend to have a robust nuclear infrastructure with many centrifuges running, that could give them the option to have nuclear weapons -- when and if they decide to have that. So, a sort of surge capability, where they can be within a few months of a nuclear weapons capability. And I don't think there's anything in the international community to try to dissuade them from that particular determination.

ROBERTS: As we said before on this program, earlier, in the wake of the American election there are all these ideas about how to deal with Iran. One way is talking. What would talks possibly do? Here is how Aneesh Raman took a look at that issue on Tuesday.

(BEGIN VIDEO CLIP)

ANEESH RAMAN, CNN CORRESPONDENT, THIS WEEK AT WAR (voice over): Direct talks would help give the Islamic Republic the stamp of approval as a regional power. But if the U.S. talks to Tehran, some analysts here and elsewhere, say Iran's president would have little reason to back down on his nuclear program; a program that's become a rallying point of pride in the country.

(END VIDEO CLIP)

ROBERTS: Aneesh Raman, Iranian officials say they want to have a diplomatic solution to all this. But a diplomatic solution seems to come with the precondition that Iran's nuclear program will stay intact. So what is there to talk about?

RAMAN: Exactly. Iranian officials, John, have left little doubt that any dialogue -- and that's a big if at the moment -- between the U.S. and Iran over Iraq, cannot be done exclusively out of context with the nuclear issue.

Iranian officials have said not only are they not backing down, not only are they openly in defiance of a U.N. deadline, two and a half months old, but as you mentioned they're pushing ahead, full steam ahead, to finish this program by the end of February.

So, in terms of any dialogue, the reason is seems completely implausible at the moment, is that the U.S. doesn't want to talk to Iran until it suspends its nuclear program. And even when it comes to Iraq, Iran won't talk to the U.S., unless the U.S. backs off pressure over its nuclear program. Neither of those scenarios seem to be happening any time soon.

ROBERTS: Ray Takeyh, even as the U.S. tries to keep up the pressure, at the United Nations, Russia now saying, well, we think that negotiations are better than punitive sanctions. India saying the same thing, after it just recently signed a huge liquid natural gas contract with Iran. Trade with Turkey is up. China -- Iran now trying to forge greater ties with the German finance ministry.

Iranian officials have to be looking at this and saying nothing is going to happen to us so why should we?

TAKEYH: I think they have a right to look at the international community and recognize that the United Nations Security Council is unlikely to impose strenuous economic sanctions on them. So that particular leverage that the United States thought it had, it is no longer there. And as Aneesh was saying, the deadline is now two and a half months old. And nobody is even talking about the deadline anymore. There's not much punitive sanction that we have on Iran as far as international organizations are concerned.

ROBERTS: Right.

Aneesh Raman, there was an interesting little episode just the other day when Iran's speaker of the parliament went out there and publicly praised North Korea for its anti-U.S. stance. It seems as though the Iranian strategy now is not just to hang on to its nuclear weapons, but also to really poke a finger in the eye of the United States.

RAMAN: Iran, John, sees this as a defining moment. They are aiming to unseat the United States as having the most influence over Middle Eastern affairs. They look at the landscape and they see the U.S. confronting a very difficult question. What does the U.S. fear more a nuclear Iran, or a destabilized Iraq? They look at the presence they have in Iraq, the presence they have in Lebanon, the presence they have in the Palestinian Territories.

And they see this moment, really, as one where they cannot lose, and where they will only rise against the United States, and exist as a superpower in the Middle East.

ROBERTS: And Ray Takeyh, Jimmy Carter said it recently, that it is better to talk with your enemies than fight with them, if that's possible. James Baker has advocated intense diplomacy with both Iran and Syria.

But there are so many grievances and such a history between these two countries. Do you think that direct talks with Iran would bear any fruit, or would they just become a session to air to those grievances, and really wouldn't get anywhere?

TAKEYH: Well, I think it would start out as a session of airing the grievances but the negotiations, if they're comprehensive, they deal with all issues of concern between the two countries, could actually make some progress in terms of actually rationalizing this relationship.

But if they're targeted over specific issues, nuclear enrichment or Iraq, they're unlikely to be successful. And I'm not sure if Iranians will negotiate with the United States on areas that the United States needs their help and nothing else.

ROBERTS: So, a month and a half after the latest deadline at the United Nations, the Iran program is still somewhat uncertain as to how thing will go forward.

Ray Takeyh, thanks very much. As well as Aneesh Raman, in Tehran. Appreciate it.

If Iran's nuclear program is on the radar, what about North Korea?

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The only way for North Korea to move forward, for the good of their people, is to abandon its nuclear weapons programs and rejoin the international community.

(END VIDEO CLIP)

ROBERTS: An update on the military and diplomatic options there. We're back with that, THIS WEEK AT WAR.

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ROBERTS: Why did the United States talk tough this week about North Korea and its nuclear ambitions? And how can President Bush use his Asian trip to build a new diplomatic front against Kim Jong-Il?

Joining me now is John Pike, he is the founder and director of GlobalSecurity.org; and our Senior Pentagon Correspondent Jamie McIntyre is back with us.

President Bush issued a clear warning to North Korea about its nuclear activity on Thursday.

(BEGIN VIDEO CLIP)

BUSH: America's position is clear. The transfer of nuclear weapons or material by North Korea to states or non-state entities would be considered a grave threat to the United States. And we would hold North Korea fully accountable for the consequences of such action.

(END VIDEO CLIP)

John Pike, the emphasis from the president seems to be shifting from North Korea's possession and development of nuclear weapons now to the issue of proliferation. Is it possible to overstate the concerns about proliferation when it comes to North Korea?

JOHN PIKE, DIRECTOR, GLOBALSECURITY.ORG: I thing that he's done exactly the right thing in terms of making it very clear to North Korea that we're going to find a return address on any nuclear weapon that terrorists detonate, so that Kim Jong-Il doesn't even think about the possibility of trying to pick up a little spare change by selling an atomic bomb.

ROBERTS: Do they have the technological capability to do that?

PIKE: That's a fairly closely held secret right now. That's a tough challenge. I think that they believe if they found the bomb before it was detonated, that they'd have a better chance of getting that return address than after it was detonated. That's a closely held secret.

ROBERTS: That's a big if.

PIKE: One way or the other, we're going to tell Kim Jong-Il we're going to find that return address, so don't even think about it.

ROBERTS: Jamie, the president threatened unspecified consequences if North Korea were to sell its nuclear technology, or a weapon to any third party. Any idea what the Pentagon might be thinking about in terms of those consequences?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT, THIS WEEK AT WAR: The reason it's unspecified is because there aren't any really good options. The time for a really viable military option, regarding North Korea and it's nuclear program, has sort of passed once they were able to take the fuel rods of the reactor.

The U.S. obviously is constantly updating its plans, both in the defense of South Korea, and possibly offensive action. But the problem with all those plans is they risk all-out war on the Korean Peninsula. While there may be things that the United States could do militarily, they all have enormous risk.

And so the emphasis is all in the diplomacy and, as John pointed out, the sort of getting that message across that if you take these actions, it really won't be in your interests because at the heart of it, the Pentagon believes what Kim Jong-Il really cares about is regime preservation, keeping himself in power.

ROBERTS: Keeping his champagne and caviar and Cuban cigars.

John Pike, North Korea certainly has shared missile technology with other countries, Iran being one of them. Is there any evidence that it has been sharing any kind of nuclear technology?

PIKE: Well, there's circumstantial evidence that's hotly disputed within the intelligence community that the second test that was conducted in Pakistan back in 1998 was actually North Korea's first test.

There were North Koreans in the country. There was plutonium that was vented from that test. We've never seen any pictures of that test. It was conducted very far away from the first Pakistani test that was highly publicized.

There's every reason to believe that Iran, Pakistan and North Korea have been basically operating a combined nuclear and missile program for the better part of the last decade.

ROBERTS: Do you think it is still going since the A.Q. Khan was dismantled?

PIKE: It's not clear to me that the A.Q. Khan network was really dismantled. They're continuing to share technical data. This latest missile test, that Pakistan conducted, I'm sure there's a DVD of the test results that was sent to Iran and North Korea. There's just no way to track that.

ROBERTS: That's a troubling thought.

MCINTYRE: You know, John, that's why Iran is such a problem as well. Because as long as we believe that North Korea is the potential proliferator of nuclear weapons, we can deem them to have been the source. Once you have more than one suspected proliferator, how do you get that return address that John Pike is talking about.

ROBERTS: Exactly.

MCINTYRE: If something were to happen, how can we threaten North Korea that we'll come back to you?

(CROSS TALK)

ROBERTS: In particular, if the fingerprint is similar because the technology is coming from the same place.

PIKE: It's a problem.

ROBERTS: Uplifting conversation.

PIKE: Yes.

ROBERTS: John Pike, Jamie McIntyre. Thanks. Appreciate it.

From North Korea, we return to Iraq and how the wave of violence there has washed away some of the people crucial to their country's future. Straight ahead, in THIS WEEK AT WAR.

(COMMERCIAL BREAK)

ROBERTS: THIS WEEK AT WAR brought fresh pictures of Iraqis struggling to hold on to normal lives in the face of disruption, uncertainty, torture and death. Will Iraqis hang on, or for those who can, will they flee? And what is the cost to the country they leave behind? CNN's Paula Hancocks talked to some Iraqis who have made the hard choice.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT, THIS WEEK AT WAR (voice over): In the heart of the Jordanian capital is Little Baghdad. Restaurants like Al Maha (ph) filled with Iraqis who have fled the violence and bloodshed in their own country.

Abu Haytham left two years ago. He's re-created his popular Baghdad restaurant here in Amman.

The United Nations estimates at least half a million Iraqis are now in Jordan. That number's expected to rise after the mass kidnapping at the ministry of higher education. Increasingly Iraq's intellectual elite, teacher, doctors, are being specifically targeted by militias.

Hassan Al-Bazzazz is a professor at Baghdad University. He wanted to stay in his country, but three months ago he fled the violence, with his wife and four children.

HASSAN AL-BAZZAZZ, IRAQI PROFESSOR: You miss your relatives, your family, you miss your friends, and your colleagues, you miss your job and you miss all the good memories.

HANCOCKS: He used to teach political science. Now he's becoming politically active in Amman to try and help his country. While driving to work these days he thinks back to his commute in Baghdad.

AL-BAZZAZZ: I have to pray 50 times before I leave my house. And I have my hand on my heart all the time, because I don't know if I'm going to reach my school safely.

HANCOCKS: The professor says the brains of Iraq must be saved to rebuild his country, and he prays that day is not too far.

AL-BAZZAZZ: We did not take the keys of our houses to keep it in our pockets for years and years to come. No. We would never let what happened to the Palestinians to happen to the Iraqis, never, ever.

HANCOCKS: But for now Al-Bazzazz and more than 1.5 million other Iraqis live outside Iraq. Safe, but psychologically tied to a nation in the throes of a horrific war. Paula Hancocks, CNN.

(END VIDEOTAPE)

ROBERTS: And a growing problem in Iraq is that intellectuals and educators are now being kidnapped by these death squads, and killed. What is going to happen to the brain trust in Iraq? A question for the future.

From the Middle East, we'll see how President Bush is set to mix his duties as commander in chief and the nation's top diplomat, coming up on THIS WEEK AT WAR.

(COMMERCIAL BREAK)

ROBERTS: In the month I spent in Iraq , in the run-up to the election and in the days after, one thought kept coming to mind: That there was no end to the march of death in Iraq and no shortage of ways to die.

That impression was driven home on November 9th when I watched a U.S. soldier drawing his last breaths on a Baghdad highway. His HUMVEE had been hit by a roadside bomb. One of those shaped charges that the U.S. troops refer to as "pure evil." Another soldier in the HUMVEE was already dead, disintegrated really by the force of the explosion.

I watched medics trying to save the surviving soldier, talking to him constantly, telling him to hang in, to stay with them, to not give up. He was a member of a team that was helping to train the Iraqi national police force. One of the great hopes for Iraq to some day stand on its own feet, and allow U.S. troops to come home.

As I watched this soldier's life slipping away, that hope seemed a long way off. All I could think about was the anguish that his family was about to endure when they got the phone call, or the knock on the door. It's one thing to hear about the grim statistics of death in Iraq it is quite another to witness them unfold personally. And you can't help but wonder how many more are yet to come.

Here's a preview of what here looking at for next "WEEK AT WAR.

Monday President Bush continues his Asian trip traveling from Vietnam to Indonesia. Tuesday, Mr. Bush meets with U.S. troops in Hawaii and is briefed by officers of the Pacific Command. Wednesday, United Nations ambassadors will brief the Security Council on what they saw on their inspection tour of Afghanistan.

Thanks for joining us on THIS WEEK AT WAR. I'm John Roberts. Straight ahead a check of the headlines, then "CNN PRESENTS: Combat Hospital." A riveting look at the frantic fight to save the lives of wounded troops inside a Baghdad emergency room.

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